Have a continuity plan to guide you after disaster strikes

IF AN earthquake or tsunami were to hit us tomorrow, would your business be prepared?

Recent disasters such as Hurricane Katrina, the Indian Ocean tsunami and the 2003 blackout in the Northeastern U.S. have demonstrated the importance of preparing your organization for a disaster.

The Big Island earthquake last October not only caused structural damage, but an island-wide power outage on Oahu. There were a few areas on Oahu without power for over 14 hours. Some businesses were able to operate with the use of emergency power systems. Others were not so fortunate and lost sales and customers during the disruption.

Consider creating a business-continuity plan to help your organization respond to and recover from a disaster -- or any other kind of business interruption.

The business-continuity plan is a catalog of steps and checklists to initiate following a disruption, including identifying team members and their roles for recovery. The plan should include the following:

» Establish an emergency response team. After an event, the team should meet to assess the situation and then make decisions on what steps to take next. This team should have regular meetings to compile information needed to recover from a disaster.

» Identify critical functions. Organizations need to analyze what critical functions are necessary to keep the business running (for example, sales, accounting, and customer service), as well as critical employees who would have specific responsibilities in the event of an emergency.

» Develop a communication system. Organizations should establish a communication system, such as a phone tree, to contact their employees. Keep a list of all employees, as well as key vendors, suppliers, and others whom you depend on to keep your business running. Make sure you have all current phone numbers, including cell-phone numbers, home-phone numbers and personal e-mail addresses. The list should be updated quarterly.

» Choose a central location. In cases where a facility is heavily damaged, the plan should include a pre-determined location where the emergency response team can gather to determine the next step. Organizations should also consider identifying an alternative site to temporarily run operations.

» Protect data. One of the most crucial functions for any organization is their information technology system. A disaster may not be a hurricane or flood, but it can mean hardware failure or a crippling virus attack. The organization's electronic data (and paper records) should be backed up and sent offsite for protection.

A BUSINESS-continuity plan is not a short-term project, but a process that must evolve with the organization and environment. Once created and tested, maintaining the plan becomes the most challenging activity.

To ensure the plan is current, consider the last time the plan was tested and reviewed. In addition to an internal review, a qualified independent party could review the plan to ensure expectations are met and to help identify areas of weakness.

The key is to develop a business-continuity plan that is tailored to your organization's functions and budget. The plan doesn't need to be complex, but should include the essentials for recovering your business and protecting your employees.

And make sure you know where your flashlights are.

Maile Wai is an assurance manager in the Honolulu office of Grant Thornton LLP. She can be reached at maile.wai@gt.com